the city in trouble years ago. stuart: i am just waiting for the bailout. [ laughter ] stuart: aren't we all. the national economy is not in good shape. sandra: never before has there been a bigger disconnect in the economy and the stock market. listen, or than 7% of s&p companies had the his earnings season. the reason these companies are doing so well is because wages are not going up and people are doing more work for less money. wait until the sequestration hits on march 1. stuart: charles, you think that it is going up? charles: i do. when caterpillar reports that 70% of their revenue comes from outside of america. i do worry about the media.

every single report that came out last week with either bad or devastatingly bad. stuart: you are right. you got that one right. our time is up. here now is dagen and connell. dagen: you are all the pressing. connell: know. thank you, stuart, for that. i am connell mcshane. dagen: i am dagen mcdowell. the first year of a second term president is historically bad. which is it? connell: i told him we have a bone to pick with him. fha could make your life that you brought to buy your next house. spew forth the federal reserve act. another example of the online war putting your money at risk.

connell: judge andrew napolitano is here later in our. dagen: top of the hour. stocks every 15 minutes. nicole petallides. nicole: 40 points away from 14,000. the dow is down right now about 20 points. we had some volatility. we had 100-point moves basically three days in a row. yesterday, obviously, we have been on the move. the dollar is stronger. disney setting an all-time high. hewlett-packard, 3m, disney and coca-cola are helping. united healthcare coming under some pressure. the drug index is to the downside. the banking index has been stronger. we will continue to watch the highs that we set recently.

connell: we will move to our first guest. it is sam stonewall -- sam stovall. we need you, sam ellis today to pick a cliché. >> it is not that the first year is out bad that it is just better than the year before. as goes january, so does the year. the remaining 11 months of the year and up 84% of the time since world war ii. connell: i think that this brings up a larger point.

we are close to these all-time highs. how do you tell the difference between signal and noise? there is so much noise out there. you say just because the afc won the super bowl: the markets will do this. which one do you listen to? >> that is correlation without causation. connell: how do you connect the dots with that? what kinds of questions you ask yourself when you hear something happen? >> i think history is a great guide. it is never gospel. second what i say is you have to overlay history with the current outlook for the economy, fundamentals and technicals. while history may frequently rhyme, sometimes it forgets the

words. connell: mentioning the dow around 14,000. apply it to the present day with the question everyone seems to be asking us, the market ran up so much that did i miss it? >> i think so many people have been waiting for a meaningful pullback since october 2011. they have not gotten into this rally and, basically, they have been left behind. connell: they should get it now? they should chase it? >> chasing is the wrong word. there is a 50% discount to the average since 2000. over this entire secular bear market, we are still looking at valuation pretty cheap.

connell: the stock market looks pretty good versus bonds. >> 14,000 on the dow. it is a psychological level. connell: great to see you. thank you. dagen: now on the latest on the online attack on the federal reserve. and internal fight was breached by hackers. they say it was a brief attack. they were not able to hurt the critical operations of the federal reserve. there were reports that the group anonymous published private information. we will bring you more information on this story as we get it. the debt is scheduled to fall to $845 billion. if congress fails to make any changes to our current financial

situation, the nations that could hit 77% of our economies size gdp by 2023. douglas holtz-eakin joins us now. should we be worried about the federal reserve in and of itself? >> look, the fed has been the biggest buyer of treasury debt now for several years. it will be able to stop its extraordinary ontario policy as soon as we get our fiscal policy in order. taxes are nearly at their highs. we will have a trillion dollar deficit.

dagen: don't you think that the democrats will continue to fall back on raising taxes even more than they already have? it is nothing compared to the $7 trillion in additional debt. >> this is not a solution to our problems. i think they have used this to great political advantage. that is indisputable. that is not a solution as to where the budget has to go. what will the senate democrats put in their budget? what will it look like? they will not be able to raise taxes and solve the problem. the taxes will not work.

they do not want to reform entitlements. dagen: there is a growing chorus among many people in this country that our debt is not that much of a problem because we have had these low, low, almost record low interest rates at this point. ultimately, if the fed decides we are worried about inflation and begins to withdraw some of this money out of the system, will that be the day of reckoning? >> that will be a very bad day if it happens. you are hearing democrats say we have made a lot of progress, we just need to do a little bit more.

connell: do you think you could still put it to the next president? >> the deficit will go down as the economy recovers. it is slowly doing that. i could see a real effort to make that happen. dagen: dog, it was great to see you. better in person, but we will take you by a remote. hope to see you soon. their practice and abuse on your money. connell: the president newest candidate nominee. dagen thinks there are some positives regarding this nomination. monica crowley, who is coming up, apparently, does not see them. both of you will have a chance to explain yourselves. dagen: i want a chance to get ahead. connell: it is all straightahead. oil is that any 6.73. we will be right back. ♪

connell: we are back to talk about this explosive congressional report. medicaid funded now for profits in the state of new york are hauling in some big-time salaries. one ceo pulling in $2 billion in 2011. dagen: monica crowley joining us now on set. why is this happening? >> new york is the medicaid capital of the nation. corruption is deeply embedded in the politics here. frankly, the salaries are atrocious and a mere drop in the bucket compared with the billions of dollars spent on inappropriate services such as town cars to go to a doctor's visit, grocery shopping

services, $4000 a day. to residential facilities, none of which bore very little of which ever benefits the patient and even the anonymous payment for services never even rendered. the reason this goes beyond new york is that the system is rigged for corruption. medicaid to politicians is not a noun. it is a verb. for every dollar the state spends, the federal government spends you another dollar. i will give you a dollar for every dollar you spend, would you be in trouble? connell: you would be in trouble. >> states should be on an allowance. connell: the intention to get more money to spend on things that will help. >> though fraud takes over. the politicians figure out ways

to spend his money and keep collecting more. unfortunately, under the new health law, it will get worse. many states that are joining the medication expansion will be getting nine dollars for every dollar that they spend on certain medicaid recipients. medicaid has been around for decades. the checks and balances have not worked. dagen: as you point out, there is no incentive to really do that. >> they know that even a gravy train can crash. dagen: that is what it will take in order to shrink medicaid. >> the money that is pouring into these inappropriate salaries and other wasteful spending is coming from their

own resources. when you waste the money, your kids do not have the money. dagen: thank you. it was good to see you. i want grocery shopping services. connell: let's go to nicole petallides now. looking at zynga. nicole: we will start off with zynga. look at the stock here. jumping big-time. earnings easily beat the street. the stock is up about 9%. a big move here for zynga. it is directly tied to facebook often. today it is all about zynga. i wanted to also take a look at shutter fly. shutter fly is getting a new 52 week high. the stock is up 19%. they did see their holiday season do well. they peep the street with their numbers.

it is $40.02. a whopping 19% gain. connell: thank you. dagen: sally jewell. to run the interior department. is this good enough for monica crowley? connell: do you want me to answer that now? walt mossberg is back this week talking about the microsoft service pro. he will let you know whether it is worth your time and money. first, what do you think about how the currencies are faring right now? we will be right back. the local

>> @21 minutes past the hour, i have your fox news minute. boy scouts of america will delay whether to ban gays.

they have declined in late 19%. french president says france may pull troops out. they have given al qaeda linked rebels out of cities. in fort lauderdale, a bakery truck slammed into a pillar and was hanging off a highway overpass during rush hour. rescue crews pulled the driver out, but one passenger died. the condition is not yet known. those are your headlines. back now to dagen. dagen: thank you very much. president obama said to nominate business executive sally jewell to run the interior department. connell: as we welcome monica

crowley, my only goal is to try to get monica and dagen to yell at each other. monica will start. she is here to argue, i think, this is a bad choice because president obama is making it. >> she is a top business executive. she has an energy background. she has a lot of experience that i think could come into play. my only problem here is that even some of the most impressive people who have served in obama's cabinet and of being cooperative. even the most strong willed and impressive people end up getting used as props. dagen: you are suggesting that this woman who ran the outdoor retailer, one of the best companies to work for and the country, that she is just a big old piece of plato and she will

let herself get molded. >> they do kind of get chewed up and spit out. she is very strong-willed. she is incredibly impressive, do not get me wrong. she does not have a whole lot of experience in government. connell: who are you talking about specifically, by the way? >> they do serve at the president's prerogative, obviously. connell: who is different after serving in the administration? >> hillary clinton who is the most strong-willed and came in with the most independent portfolio, even she kind of got co-opted where she did not have an independent power base where

i thought that maybe she could enjoy. barack obama made sure that she could not enjoy that. every president sort of does this. they need to control their agencies and their people. [talking over each other] >> i would love to see her come in and argue very powerfully, to the president and others in the cabinet, for expanding drilling, federal lands for fracking, i would love to see her make some very powerful independent argument. dagen: wanted it be impressive if she could balance it and prevent them from taking away what we already have on federal land? wouldn't that be fair to say?

if she could just keep the status quo, isn't that a good thing? >> i would say so. you know, she has some national allies in the labor region. she can make in employment argument in that regard also. if she can prevail, then we know she will have done a good job. connell: well done, dagen. i think you got her to come around to our side. dagen: are you mocking me? connell: no. thank you, monica. have fun on the radio this weekend. the monica crowley show. walt mossberg is coming up. he will let us know if you liked the new microsoft service pro. dagen: say goodbye to the saturday mail service.

here is some of today's winners on the s&p. ♪

connell: data hawks. the high demand for data with

smart phone users. mail service seems to be on its way out. we have the judge coming in. he will have some constitutional questions about the way president obama is using these unmanned drones. dagen: it is the bottom of the hour. nicole petallides. nicole: i cannot believe, right, some things were great just the way they were. turns out that the napoli will change one of the little guys that go around the board. the iron is out and the kitty cat is in after a month of voting. toy robot, qatar, helicopter, diamond ring.

it turns out that the perfect little cat moves in and the iron out. save it. maybe it will be worth something on ebay. polo ralph lauren. that is about 7.5%. the earnings beat the street. retail sales have been on the rise. margin sales have been improving. they plan on revenue to accelerate. two very familiar household names. i do not know what you guys think about the little game pieces that go around monopoly. connell: thank you very much. a little technology now. microsoft service pro hitting the store shelves on saturday. the important tank today is that once review of it is in. dagen: walt mossberg is here from the "wall street journal."

i gave you a huge shout out earlier. it was really painful because i yelled. it is awesome to see you. as always. about this service pro, you do not like it as much as the original? >> that is right. first of all, thank you for the shout out. the surface pro, they brought out the surface in october. it was a tablet with a little bit extra. the extra was they built in word, excel and powerpoint. you could not run regular windows apps. this surface pro runs a full window app.

they are trying to be a tablet and a laptop. they did not do a great job of either one. let me just give you an example on the tablet side. first of all, the minimum price you can pay is $899 for this thing. it weighs 2 pounds, which is about 40% or then and ipad. if you want to use it as a laptop, you have to get an add-on keyboard. that adds another $130. the battery life, in my tests, was just under four hours compared to ten hours for the ipad. it is just, and on the base model that has 64 gigabytes of memory, only 30 gigabytes of memory is free for you to use. the rest of it is taken up by windows. connell: just combining two

pieces of technology. the idea of being able to do that. we used to have separate devices for a lot of different things. we all like having music on an mp3 player and that we combined it with a phone. in some cases, it does not work. will anybody be able to come by just about everything we like to have with us in one device or should they not even try, in your view? >> it is a great question, connell. e-mail is a good example that has moved over. twitter and facebook, all those things. tablet and smartphones do those things fine. what they do not do is have the productivity apps. on and ipad or in android tablet, you can certainly modify or review a spreadsheet. you can even technically create one. it is not a great environment

for that, though. all of the hardware guys are going through certain jujitsu trying to make things slip and twist and, you know, work as both a tablet and laptop. windows eight combines a tablet interface in the regular windows computer interface, pc interface that you have been used to for many years. i have not seen one that i think really does the job well. i do not think that this one does and i do not think the ones that are laptops that kind of flipped around to be a tablet to either. dagen: built these executives read your column, walt? don't they know that if they put something out with large battery life in ways more than the heaviest ipad that it is extremely costly with a keyboard will be $1000 or more, don't they know that that will not work? particularly in your eyes?

>> i think that it is good. if i were a microsoft shareholder, i would want them to be trying to push the boundaries and do these things, but, i think, if you look at some of the other reviews, they are all pretty much similar to my conclusions. this particular product will appeal to some people. there are people going out and buying it as soon as it comes out. it does not pass my test for being either a great tablet or a great laptop. connell: that is a great test. walt, thank you, as always.

walt mossberg. dagen: great to see you. thank you. my old dell laptop that i had was like a suitcase. connell: i am sure it was not that long ago. dagen: it was in the 80s. [ laughter ] dagen: no, it was not that long ago, actually. nothing can stop the post office from delivering that but now that is only during the week. connell: that is fine with both dagen and i. they will in saturday delivery. rich: they have been asking congress to let them do this for years. the usps lost $16 billion in the last year. this is their attempt to try to get this back into line. this is what is in source for

saturday's. no letter delivery on saturdays. post offices will remain open. package in po box delivery will continue. that will save about $2 billion. this is the first step to getting the usps back to even. >> we generate all of our revenue from the sale of postage. we take no tax dollars. we do not want tax dollars. however, we also do not have the ability to reduce costs in the way that a private business would. rich: the letter carrier union does not like it. if he arrogantly thinks he is above the law or have the right to decide policy matters that should be left to congress, it is time for him to step down. there was a $50 billion borrowing limit to the treasury department and it has maxed that out. back to you. connell: right now they are bleeding money.

thank you, rich. rich edson. before you do not respond. i call you and call you and leave you message. phone companies are pushing smartphones. data plans are going up big-time. connell: some people are calling it the end of the personal computer era. shibani joshi is coming up with one of the biggest stories. that is dell going private. ♪

>> i am lori rothman with your fox business three. liberty mobile casts a deal to buy virgin mobile. the parent company of the fox business network is new score. the debut raised 247 logan dollars in a initial public offering. above the expected range of 18-$20 each.

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dagen: hire smart phone bills are under way. cell phone networks get faster the more data you use. you know how that adds up. cisco says by 2017, your smart phone bill will go up by about $40 a month. the 4g network will have us eating large video files from the likes of netflix, and other sites. that may be a way for users to

cut back on their monthly bills. you can check out the shares of some cell carriers. how they are holding up today. connell: rumors of an hp breakup sent shares climbing from the closed yesterday. they are up today. dagen: shibani joshi knows where dell is going. shibani: if i knew, i would be in a different job, i think. we are all living through history, as we know it. a big week for dell. we have been reporting about it going private in a $24 billion transaction. the talk this week is about the hidden meaning and it going private. in fact, writing in a research note in the last day, we viewed the transaction as another sign

of the saving importance of the pc industry. the talk is where dell will go as a private company. probably focusing on a higher margin. yesterday shares rose about 6% as there were talks and a report out that the company may rid itself of its core pc business. i spoke to somebody very close to the situation. they say the company intends to keep all of its core businesses intact. this is just to give you a sense of what is happening. a complete makeover of the pc industry. i heard your interview, guys, with walt mossberg. right now, they are in this battleground. dagen: thank you, shibani. shibani joshi on that story. connell: let's go to nicole

petallides on the new york stock exchange. every 15 minutes, stocks now. nicole: i am taking a look at 3m. it is a leader in the dow jones industrial average. it is up 1.5% right now. it is fitting a penny away from this all-time high of 102.97. there is a nice ten year chart for 3m. the shareholders are very excited. this is a way for companies to build shareholder value. it shows confidence. basically, a great way to say thank you to those shareholders. they have moved forward. they have an 8% dividend hike. back to you. connell: we will be back at the top of the hour. thank you steve for the president loves drones. the judge andrew napolitano has questions on how he wants to use

them. connell: if you want to make some money on the whole drone discussion, here is a look at the stop plate in and of that sector. we will bring the judge in here next. you do not want to miss that. ♪

dagen: a confidential justice department memo came by nbc and revealed that the u.s. government can order the killing of any american citizen believed to be associated with al qaeda. connell: judge andrew napolitano is here.

your take on what we have been hearing about drones and the legality of them. >> federal judges and ordinary citizens have been seeking the legal research on which the government has relied that they can kill if they are in harm of national security. suddenly, it shows up in an nbc newsroom earlier this week. they really have made fools of the judges who spent hours and days and weeks struggling over the laws involved here. the document itself is breathtaking and chilling in the cavalier way that suggests that the president, actually it does not even say the president, any informed high level u.s.

government official can strip and american of his or her constitutional protections and ordered the killing of the american if the person is overseas, if it is difficult to arrest that person and it is likely they will harm national security. danger is not defined. this is the power claimed by kings and tyrants. this is about as un-american as someone can imagine. a jury trial before the government can take your life or liberty. this is a defined the federal law and state law and treaties that the united states of america is a part of. all of this came about when the president dispatched drones to kill new mexico board admitted

-- the friends american citizen 16-year-old friend. their grandfather had a lawsuit. a federal judge said how do i know what the president will do? i cannot stop the president from breaking the law in the future. the justice department claims that the president always follows the law. we now know that the president admits that he did send the drones to kill them. a federal judge may decide whether or not the government can do this. the supreme court told the bush administration that most notable

that you just cannot take your person and try them before some core. connell: as i said, much more on this in the next five days. dagen: stocks near all-time highs. volatility remains low. why are so many investors looking for the next spark for a pullback? connell: we have the trade now with sandra smith. sandra: we continue to see the markets flirt with these all-time highs. take a look at your vix chart. we are down at 13.7. this means there is a pound of complacency in the marketplace. often times will we get that

low, analysts put up their hand and say this could be an indicator that this market is ready for a selloff. you can see the dow up 7% so far this year. the s&p 500 of 6%. the nasdaq is up 7%. this market is tempted to see a selloff. i will be back at the top of the next hour to show some technology earnings that may be the ones to derail this rally. everyone is sort of looking for that spark. that may be just it. we will have that at the top of the next hour. connell: small business investors under attack in the state of california. cheryl and dennis tell us why a ruling will discourage job creation in california.

they go one-on-one with the postmaster general. ♪

>> we are coming up on noon eastern time here on "markets now". i'm cheryl cheryl. dennis: i'm dennis kneale wf a bull debate and whether there's time to get into this as the dow aims for the high. cheryl: the federal reserve admits the system was hacked, and the cyber group anonymous says they got bank country creds for the top bank. we'll take a look. dennis: the budget problems forcing ending of saturday delivery. one on one with the u.s. postmaster general. that's ahead. cheryl: we have nicole at the new york stock exchange looking at danger. what a quarter.

the stock is riding today. >> that's right. a lot to look at on wall street today. disney, an all-time high after all-time high after the quarterly report. this dow component, as you noted, up 1.1%, up 60 cents at 54 #.87. it hit another all heaven -- all-time high. it's been on a tear. it's been up over -- let's see, stocks surging 264% from its bear market low back in 2009. it's certainly a moe disturb -- me men tum player and hit a record high 29 times in the past year. high after high after high. looking at the dow jones industrial average, virtually flat and not far from the dow 14,000 which we hit over the last several trading days, and right now, down two points. the nasdaq with a gain. back to you.

dennis: thank you. stocks off to a rough start this morning, but equities near the highest level ever, is it a blip on the radar or signs of more problems to come? katie stockton, chief market technician, thanks for being with us, and let's start with you. what do you think of the markets? the people are getting nervous, up 7% since january 1. >> well, the market, obviously, has strong positive momentum, and i recommend investors stay on the same side of the momentum. i'm bullish here. there's follow-through after january's strong month for the s&p 500, up 5%, typically with a 5% plus up month in january, it bodes well for a strong year for the broader market. it's healthy, and even over the next couple of weeks in february, i think we can sustain the over bought conditions registered for another couple of

few weeks. ultimately, giving way to a correction, maybe looking at march or so. dennis: back up after the collection; right? dan schaver, you say we are near the early stages of a deflation deflationary depression? >> yes, the stocks are coming down. forget the stocks are up. what's good? last quarter gdp was a negative number that all the economists totally missed. japan trying to reinflate the economy. that's why the yen is weakening with the new stimulus, which they did for 20 years, and it has not worked. looking at the position of the commercials, the hedgers, the traders report from the trading commission, and they are the highest net long position since march of 2012, the bottom in the bond market pricing, and then a big rally. we look at the crb indexes, flat to negative, where's the inflation? i think the economy's really chugging along at a very low

rate. the government, the federal reserve, stopped publishing the m3 -- dennis: okay, cutting you off there. we have to go back to katie. cay di, -- katie, there's a worry about inflation, a contradictory worry about depolice-- deflation. what do you say? >> it's more constructive on the economy than dan is. we'll see the crb and measures of inflation rally from here, and, in fact, i'm bullish on commodity prices as well looking beyond energy prices, but also at things like the base metals, industrial metals, copper, things like that. i'm constructive on indicators of the economy, not just, obviously, the stock market which still has the momentum. dennis: yep, dan? >> i agree the commodity prices are inching up, but the commercials have a high net short side. pointing out we had in january of 1973 a megaphone pattern that

from 1966 to 73 there was an attempt at a new high in january and went down 50% in december of 1974. that's an inflationary depression where here i talk about a deflation depression. dennis: the megaphone comment is wonky. i want to bet -- won a bet in april one at 1400, i said 15 00. where does it close this year? >> below 1200. dennis: katie, where does the s&p close this year? >> above the 2007 highs. dennis: a number? >> above 1575. dennis: i think we close above 1600. let's bet again. >> we got it again. dennis: thank you very much. good job. >> thank you. cheryl: in today's extended

"west coast minute," outrage in california. small business investors under attack billed for back taxes after a california court throws out legal tax breaks they took over the last four years. joining us now, small business owner and advocate from advantage payroll services. all right. 1993 state law, this is what they were legally doing here. you would get a tax break if you invested in a company that had growth assets less than $50 million. you know, the tax gains cut in half. it was a bonus getting people to invest in california companies, and now they say forgot it. what's it do to small business? >> it's deplorable. saying don't invest in small business in the state of california. they are calling back four years, $120 million in tax incentives expecting the small business investors that put their money and life on the line to grow the businesses to then take the money back. it's deplorable. cheryl: what about the taxpayers? 2,000 residents in california,

and the senator says the government here should not punish innocent law-abiding taxpayers retroactively because they had the power to do so. >> i have special incentives in new york state for my small business. if they go back five years, i could owe half a million to the state of new york. i did everything i have to do within the guidelines of the rules. i followed the laws as they existed then. they followed the law as it existed, and now they are punished for being good american taxpayers. cheryl: there's going to be fights from the residents, but they are in sticker shock. got a note from the franchise board in california and said you have to pay up. any chance do you think that this goes back to the court? investor and owned? >> it's possible. in 2000, there was a lawsuit brought, the u.s. supreme court ruled one of the tax laws that were passed in the state of california as unconstitutional, and, basically, said, okay, you

can't write off interest expense out of state income. now, they went back, and they said, okay, we're going to change the rule. california could go back, the ftb could go back and make this change and make sure the people don't have to pay the taxes. absolutely possible for them to do it. cheryl: we should say here the only reason they can go back four years because you can only audit someone for four years. >> if they could go back further, they would. cheryl: they can't. luckily, the law is on their side. the u.s. supreme court could step into all of this. the california, of course, it's unconstitutional for the state legislature in california to agree to let the breaks happen. that if you're going to give it to small businesses in california, those investors, it has to be to allist investors. the supreme court could step in. >> they could, but that ruins the effect of what the law was. they were trying to make sure investment stayed in the state of california. you look at what governor rick perry is doing running ads for the state of texas to get people to invest in texas and not stay

in california. there's competition going on. cheryl: that's small business owners. that's fascinating. that's small business owners, but these are residents of california who took legal tax breaks to support local businesses, followed the law, and now they have to go back to the accountants and say, guess what, four years, we had hit. >> so long for small business owners and investors in america, it's going to be big problems. i hope they change it and make sure people are treated equally. deplorable. >> we reached out to the players in this, and i think the story continues. rob, thank you. >> thanks, cheryl. cheryl: appreciate it. dennis: federal reserve hackedded. feds' admission that hackers got in at all comes as cyber group anonymous posted credentials of 4,000 banking of the fed. cheryl: what's interesting, peter, are what are the feds admitting to and not admitting to, peter? >> well, we did get a statement from the fed, going to that first. a fed spokesperson said, quote,

the federal reserve system is aware that information was obtained by exploiting a temporary vulnerability in a website vendor product. the exposure was fixed shortly after the discovery and is no longer an issue. this incident did not affect critical operations of the federal reserve system according to that spokesperson, but, dennis, as you said, according to roiters, the hackers involved here got personal information on more than 4,000 bankers who use this particular website. it's a clearinghouse for information that the fed operates, and then the hackers posted all this information, e-mail addresses, phone numbers, cell phone numbers online. now, all of this, of course; comes after hackers got into the system of a number of newspapers, incoming the "wall street journal" and the "washington post," and they are suspected to be hackers from china, but in this case, the hacker group anonymous appears

to be claiming credit for this hack of the fed website as part of a campaign to reform u.s. computer crime laws. it's something called operation last resort. dennis, cheryl, back to you. cheryl: thank you, peter barnes, for the story from washington with the fed. peter, thank you. dennis: a big bank suspending executives in connection with the rigging investigation, and liz has details. >> from deutsche bank telling fox business that sources close to the matter that more suspensions could be on the way on top of the five traders who were suspended today in connection with the alleged rate rigging manipulation of the interbank lending rates. this now relates to the rates, and deutsche bank tells fox business they did the probe, they suspended or dismissed employees that clogged back uninvested compensation and continues to do so as it completes and continues the

investigation. it's saying that it is being probed by the department of justice, the fcc and the european commission on libor. what's sensitive to the bank right now and the whole probe in general is the guys on the money market trading desk, the thinking is these employees also gave these suggested rates daily to the -- basically rate setting committees which is why this is a sensitive issue. this comes on the heels of royal bank of scotland getting fined some $650 million. this is a developing story, guys. fox business will be staying on top of this. still, a dozen banks under worldwide global investigations interrate rigging. the latest is the side traders suspended, and more heads could be rolling there at deutsche bank. back to you. cheryl: we'll watch the sphok, down 1.5% right now. >> sure. cheryl: all right. president obama's offer under attack.

andy, outspoken ceo of cke restaurants, tells us why he's unhappy. dennis: barnes & noble shutting stores across the country, not good on authors relying on book signings to sell the stories. we have one guy, though, whose a new approach. cheryl: implications ahead of the postal service ending saturday delivery. a one-on-one interview with the postmaster general is coming up in 16 minutes from now. ♪ [ male announcer ] at his current pace, bob will retire when he's 153, which would be fine if bob were a vampire. but he's not. ♪ he's an architect with two kids and a mortgage.

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dennis: 16 past the hour, stocks every 15 minutes. cheryl: team coverage for you, phil flynn in the trading pits of cme with oil and gasoline prices, and sandra here with the data wizard, and charles payne. nicole, we are up seven. >> not bad at all. it's been a run, and, you're

right, up seven to eight appointments here at 13987, and as i say the words and they leave my lips, it is a new high for the day. we are at session highs here with a gain on the nasdaq compos sit fractionally like the s&p 500. there's gains in drug stocks which seemed to have improved in the last half hour or so. the drug index is in the green. merck, united health care weighing on the dow, but the drug index has an up arrow. retail is higher. banks doing well, they helped us yesterday, bank of america and jpmorgan. the dollar has been strong, and it's interesting how we're not too far off the 14,000 mark, despite the fact we got a strong dollar. the vix is lower. phil, how are you feeling in chicago? >> we are doing great today, cold, but other than that, things are good. looking at today's market today, shaking off, talk of an oil glueing mainly because of the oil inventory report.

we saw bigger than expected big in crude oil, smaller than expected crude oil supplies at 2.67. basically, the talk of oil prices at 95, back up, gasoline futures settling down a little bit, a bigger than expected build in gasoline futures of 1.738 million. now to sandra on the wizrd. >> phil, if the chart doesn't say it all, the dow jones industrial average versus the nasdaq year to date. technology shares in the blue lagging the broader market and why many are concerns tech shares could eventually derail the rally that we have seen so far this year. what tech stock do we have coming up with earnings. activision reporting tomorrow. up 12 bucks, up slightly on the session with hopes high. the "call of duty" games expected to have done well over the holidays, processer expected

to be up 12%, the stock is up 1% this year, but it's the high hopes burning the technology share. watch for that. aol reports on friday over the past four quarters, reporting declining revenue growth, and, also, by the way, guys, linkedin, earnings after the bell tomorrow. this, too, has been a major winner so far this year, up about 15%. its revenues expected to be way up, cheryl and dennis. stocks setting up for a little disappointment based on what we have seen so far by the tech earnings. back to you. dennis: thank you, sandra smith. time to make money with charles payne. rebuilding helped this country reach revenue growth. >> pike energy, i love it. they are been around since 1-9d 4-- 1945. went public, involved in electricity, build power plants,

transmissions, substations, but it's the storm stuff helping them out. 2006, after hurricane dennis, they repaired for electric companies in florida. fast forward to 2012, high winds at 50 knots or more. virginia, west virginia, maryland, north carolina, oh, what about alabama, florida, mississippi, louisiana, the bottom line is the company grown through acquisition, but so well, the up 279%. that's not the same all the time, but we feel like it's recurring. this is a company that's done so many things right. they reported their earnings. beat the street, and the september quarter. cheryl: who pays them? >> electric company. cheryl: okay. interesting. >> absolutely, involved in nuclear and renewable. scares me how much i like the company. cheryl: probably a great thing. den deny thank you so much.

barnes & noble closing stores across the country, and an author can't sign an e-book. we'll ask casey sherman what he's doing in response to the challenge. cheryl: postal service facing criticism, and his turn to respond is coming up. coming up to break, the world's currencies, how they are faring against the dollar. dollar under pressure, and the same situation is happening today. euro at 1.75. ♪

dennis: e-book revolution batters barnes -- barnes & noble shutting down a third of the stores. that is bad for writers who use the stores to stoke their sales. his book "the finest hours," fitted for a disney movie, and there's a new book coming out, making journalists everywhere jealous of him. how important were the apeenses to you five years ago, and how many do you do now versus then? >> right, the book signings are incredibly important. it's, like, a pop star who goes out on tour to endorse the new

album. that's much the same in the book writing community allows writers to get one on one engagement with the readers, sign books, promote within the bookstore community. this is a cut across the chin, but not a death blow to writers. for "finest hours," i had 30 visits. the next book, "animal," comes out in april, i have half of this scheduled right now. dennis: i see. talking about book tours, one answer has been for authors to join together in go on tours together, like a touring comedy tour. you have done this. has it been authors who do this stuff you do, which is, frankly, very manly, nonfiction, maybe fiction, and very manly stuff, or do you have a person who writes a poetry book on the tours? >> well, you know, you try to create a themed program. i created a show two years ago

called "masters of suspense," bringing in fellow true crime authors, and we tour at large theater venues the last two years, literally performing our works and our investigations on stage before an audience, allowing that one-on-one engagement with the readers, allowing us to grow the brands and get people interested in our work. dennis: that audience has to be brimming with horned rimmed glasses and patches on the elbows. you didn't wait for a publisher to do this for you; you did this. what about social networking, your facebook page, and those efforts? >> that's right. when you write a book, you need to take off the hemmingway hat. it's off to the authors to market aggressively. that's what i did with that "masters of suspense," a creation of my own, and it's been successful. we have gone through the social, you know, the digital stage and

age, as i said, has been a detriment to writers, but we learn to adapt to it. one thing writers are doing now is, obviously, taking advantage of social media, creating facebook pages, creating twitter handles, building and developing their own story narratives and teasers for the book to put right on to youtube. it's all about growing your audience organically when you don't have those venues to lean on anymore. we saw borders go out of business a few years ago. we hope that barnes & noble is not doing the same thing, but we have to prepare for the future as best we can. dennis: all right. i love this, you are surfing the wave rather than cursing it or lighting a candle, whatever it is. you're the writer. >> exactly. dennis: good job. >> thank you, dennis. cheryl: so, the economy may be questionable right now, but one company's sales are going through the roof. the ceo of patron spirits is

coming up. dennis: postal service under criticism for announcing an end to saturday mail delivery. i go one-on-one with the postmaster general, himself, next. ♪ at a dry cleaner, we replaced people with a machine. what? customers didn't like it. so why do banks do it? hello? hello?! if your bank doesn't let you talk to a real person 24/7, you need an ally. hello? ally bank. your money needs an ally.

>> i'm nicole live on the floor of the new york stock exchange. every 15 # minutes it's covered here on fox business networks, stocks now. chipolte mexican grill up 5.8%, in addition to the report, a wild swing in that particular stock. panera bread company with their number, and even saying that is intense. chipolte and panera battling it out with marketing and such. now switching to a name like game stop. they've been on the move, down

7%. one of the reasons why we are looking at game stop on this day where the new xbox comes out which is going to have an interpret connection. you know what that means? online games, you won't have to buy as many hard bought games from game stop. you don't have to go to the store to buy the physical games, but get them on the internet. that does not bode well for game stop, which is why we have the down arrow. dennis: battered on the gun problem. thank you so much, nicole. the u.s. postal service announcing plans to end saturday mail service, and joining us now, patrick donahoe, thank you for being with us, sir. there's huge outcry instantly, and there is any time you talk about cutting anything. congress is appalled and want saturday delivery. the post office unions saying this is a terrible decision. my first question, sir, is do you have the authority to do this on your own, or do you need congressional approval? >> well, we think that we have the authority to do it on our

own right now. if there is a disagreement about that, we got a few more weeks before any kind of continuing resolution, legislatively, we'd be done, work it out. the postal service needs to move to a five-day delivery schedule and a six-day package schedule. we lost way too much money. it's the correct business decision. it's responsible. it's common sense. dennis: less than half of business mailers say they want saturday service at all. why continue to deliver packages on saturday? why not make a deeper cut? are you failing to make deep enough cuts here? >> no, no, wii not failing. the package business of postal service is growing at a brisk rate. 14% up over the last two years. our -- two of the ten largest customers right now are ups and fedex deliver for them, and e bay and amazon in the top ten. that's the growth area. that's the future. that's where we are going to be. dennis: got it. the regular mail volume down 25% in less than a decade.

i count maybe $40 billion in losses in just the past kind of six years or so, and, yet, your compensation expense is down 15% in a time when the business falls more. instead of closing saturday service, why not reduce pension costs and benefits and pay? >> here's where we are with all of this. from a wage perspective, we've negotiated or arbitrated contracts. they received no increase or small increases, and substantially increased the percentage of non-career employees in the group, 20% across the board, better than any other company, any other union company you face. they have given back. from a stand point of the losses, they are tied to our requirements to prefund retirement health benefits. we're on record. i hope to pursue with congress to get congress' approve -- approval to have a competitive health care system to save us $7

billion a year. that's where the savings are. dennis: if they let you do that. the unions could have a problem with that, going into the market rather than a package with the -- >> we can get a better package. dennis: okay. wall street guys look at postal service as a business saying the biggest portion of what they deliver is junk mail no one wants. why not raise prices, triple prices, to businesses for mailing out junk mail and send that stuff out and make more money >>? >> money 1 the most way to get in front of a customers' eyes, period, end of discussion. if wouldn't be used if it was not effective. they get a 2% on mail. it beats digital, tv, and revenue. it's the most direct way to get in front of a customers' eyes. that's why it's there. tieing that in with digital going forward to use mail to get you to a website is more growth opportunities. dennis: beats digital, but cheaper to deliver digital.

one last thing, why not just spin off the post office as a private company? i think there's eye bankers who want to carve tup, why not go private, spin you off? >> here's how to look at it. the postal service or the federal government, universal service for the universal price. the problem you face is we would never be able to provide level service when you get into the rural areas, and even in the urban areas. if you stick with a model you go 100% pay for service like we do now, in the private sector, there's tough decisions. we take no tax money. we don't want tax money. we have to be affordable in terms of bringing mail to cover the service. dennis: yeah, the phone system, take all the rural stuff and put it into a special company that specializes in the hard to deliver stuff. thank you for being here. good luck, a tough day for you, sir. >> thank you. cheryl: president obama is asking congress to delay the

major spending cuts coming next month, but his offer, a short term package of limited spending cuts and potentially more tax hikes is not flying with republicans. joining me now, the former economic adviser, ceo of cke restaurants, andy, thank you for being here. what do you think the president ends up proposing here? do you think he's going to did out to the carried interest? is it going to go after high income earners, what do you expect? >> it's good to be here, cheryl, thank you. i think that everybody recognizes we have to reduce the deficit. the deficit is out of control. the only reason we've been able to sustain this level of deficit is because the fed prints money and buys 70%-75% of the country's debt. that can't continue. if you're going to address the issues -- you know, this peace meal, kicking the can down the road, a couple more months, a couple more months, people are sick of that. address entitlements. they are 60% of the budget. the president needs to lead on

this with a budget with rational proposals, something to at least get a democrat to vote for it. the budgets so far don't get democrats on republicans' votes. we have to deal with the real problem here which is that we spend a whole lot more money than we bring in with 60% going to entitlements that do not survive if not revised. cheryl: you're a business owner, ran cko, close to insolvency, and you brought the company back. you know what you are talking about. how do you get job creation? more jobs in the country, more tax revenue coming into the government. it seems that whether it's a supply side or the demand side, the president doesn't have an answer to that. what is your answer then? >> well, it's a little bit disconcerning. as you said on the supply side, when you look at encouraging businesses who are over taxes, over regulating, obamacare on businesses, energy costs going up, labor costs going up, and so you are not encouraging

businesses to invest and grow, and on the demand side, everybody got a tax increase. i think people in the lower income rates department think they would get a tax increase, but they got a 2% payroll tax increase, hitting 90% of the taxpayers. everyone making under $113,000. there's less money to spend, businesses not encouraged to grow, and at the same time, fed borrows money so the government can keep spending. encourage business by reducing regulations. we need regulations, but, clearly, businesses are over regulated. encourage fracking so the energy prices go down. we need to find -- businesses have to find a way to deal with obamacare. it's here to stay. we re-elected president obama. we need to work with the government to come up with rational solutions so you need to encourage businesses and stop discouraging it. cheryl: so many challenges business face. you employ 70,000 people worldwide right now. are you going to be hiring this year, yes or no? >> well, we hope to be hiring. we'd like to continue to develop

restaurants, but a lot of whether or not you build new restaurants depends on how the economy is going, whether people are building shopping centers or put the restaurants in. we are an economy-dependent business, projects we build restaurants this year. the franchises build restaurants, and i'll tell you the franchises build almost double the amount of restaurants outside the united states than they build inside the united states. we have international growth to boost our bottom line, and boost our growth, but we hope to grow in the united statesment we're going to do everything we can. we want to work with the president. we want to see this happen, but it's -- there are disconcerning things going on in the economy right now. cheryl: andy, very outspoken and wonderful person to talk to, ahead of cke restaurants, thank you very much. >> thank you, cheryl. dennis: posh pajamas, name in sleep ware, small market, big ideas coming up.

cheryl: as we go to break, take a look at the bond market. we'll be right back. ♪ my mother made the best toffee in the world.

it's delicious. so now we've turned her toffee into a business. my goal was to take an idea and make it happen. i'm janet long and i formed my toffee company through legalzoom. never really thought i would make money doing what i love. [ robert ] we created legalzoom to help people start their business and launch their dreams. go to legalzoom.com today and ke your business dream a reality. at legalzoom.com we put the law on your side. tracy: shares of mcgraw hill trade lower for a third day. the justice department announced the lawsuit against standard and poors, a unit of mrk graw hill.

the suit alleges s&p inflated ratings of the mortgage bonds. s&p denies wrong doing. investors are bearish for dreamworks animation today after they downgraded the studio to neutral. this came after dreamworks said they are pulling back the production schedule reducing two film rather than three. home depot plans to higher 80,000 seasonal workers this year for a key spring selling season. they say jobs include part-time and full-time positions available on a market by market basis pending on the needs of the stores. that's the latest from the fox business network giving you the power to prosper. ♪ twins. i didn't see them coming.

i have obligations. cute obligations, but obligations. i need to rethink the core of my portfolio. what i really need is sleep. introducing the ishares core, building blocks for the heart of your portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. cheryl: a new face in women's sleep wear looking to make a name for itself focusing on affluent women that want fashion at home. just like they do when they walk around the city. joining me for small business,

big ideas, monica, founder and ceo, and monica, you are getting -- you launched in 2012, getting into a competitive market. you are going after high end lingerie that other names have saturated that market. how are you competing with the big guys, or ladies, i guess we should say. >> they are focusedded on bras and panties, and sofia is about sleep ware and lounge ware m i think that was my frustration with starting the company was trying to find somebody who just made gorgeous pajamas. i think there's an opening for someone to come in and be an authority for the category alone. cheryl: i want to show something, this is shocking here. this is a robe, 1450, your spring 2012 collection. this is the highest item you sell right now. how are sales of this type of product? are you finding there is a buyer out there that wants to spend

$1500 on a robe? >> believe it or not, there is a buyer for that. that robe has been a great item for us this spring, and, in fact, we have, just to give a sense of what the customers are like, we have a customer in san antonio who used to shop all for her sleepware if fairs, but found us online while searching silk pajamas, and calls us monthly for an order. we are doing custom work. they are difficult to find, but that consumer exists. cheryl: how do you get the brand out there? how do you get into the places you need to be to really get picked up for the product? >> right. we're a brand new company. we have been shipping four months. that's what we are working on now. we started with e-commerce because we wanted to perfect our garments. you know, make sure we knew how to make them, the fit was perfect perfect all thing without the products, and now that we've done that and we have

the first season behind us, it's the second season going after retailers as you mentioned. cheryl: e-commerce platform. monica, thank you very much. interesting story, appreciate it. >> delighted, thank you. dennis: cheers and slam this one down. good news for the liquor industry and the money pooring into that sector. cheryl: before we break, winners on the nasdaq, and monster beverages one of them and many. we'll be right back. ♪ great, everybody made it. we all work remotely so this is a big deal, our first full team gathering! i wanted to call on a few people. ashley, ashley marshall... here. since we're often all on the move,

ashley suggested we use fedex office to hold packages for us. great job. [ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about his tendency to use all caps emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later? [ male announcer ] hold packages at any fedex office location.

♪ cheryl: so, we see the ads, but

how well do we know the business? witness the story of one ad company that lost its account after only seven months. inside the ads world with diane. >> seven months after the first agency of record in 15 years, maco shifts the duties to pitch. the auto repair company says that pitch will be heading up the $20 million campaign as the new agency on record, and maco says the goal is to build on the love and loyalty customers feel for the brand, but some question their loyalty considering how quickly they changed teams. they say they are eager for a new approach in marketing and advertising to the organization and know the team at pitch delivers innovative and exciting campaigns for consumers across the country, but the partners says there's more behind the switch than that. the company says, quote, "the change came with a new executive lineup at maaco, some of whom

had a pre-existing relationship with pitch." no response from pitch or maaco to the claim. back to you guys. dennis: all right, thank you, diane, on the new beat, diane on advertising, looking forward to more of that. good news for booze. sales figures for the liquor industry for all of 2012 # out this morning with a rosy picture for the future of the liquor business. joining us exclusively to discuss numbers we have patron spirits. thank you for being with us. talk about getting liquored up and the overview. shipments in 2012 up 3%. bad or good? >> fantastic, good for the revenues. we continue to take share from beer and wine. dennis: revenue up to 23.4 billion. we have a chart on this. there we go. even higher increase than actual shipments of cases which means that, of course, your pricings' doing well. in terms of winning over beer

and wine people, you gained a few points for the third year in a row. now biggest liquor category is vodka, up 4% in shipment. >> right. one out of every three drinks sold is vodka. the flavors continue to drive the category. we are bullish on vodka. dennis: whisky up 5.2%, but the single malt scotch up 13%. what's that mean? old men like me buy liquor? >> the way they ship now is bringing more people into the category. we have sherry, ect., bringing people in. dennis: yes. let's talk about what some hard drinkers might view as a bit of an embarrassment. flavored liquors. it started, i think, with absolute patron. flavored liquors 40% of industry sales. isn't that just a bit pansy? >> no, not at all. i've been in the industry 30 years, and it started back with

schnapps, the apple barrel got the flavor movement going. dennis: flavored alcohols a way to get the young? >> absolutely, the 74 million consumers like flavorful drinks, and that's why you see whisky getting into it. dennis: patron, your business in particular, managing editor of "forbes," they dished out more shots of tequila to themselves, climates, and me than i thought possible. how is your business doing? >> great. up 10%, double the category. dennis: up 10%, double the overall rise in tequila? why is that? >> people are learning more about the category just representing 6% of the total distilled spirits category, but whatever you can do with vodka, you can do with tequila. dennis: upscale and i like that's what happening there. if there was a no hangover

alcohol, there's a billionaire in the making. thank you, both patron and u.s. spirits council, thank you for being here, and thank you for exclusive, baby. >> thanks for having us. dennis: cheryl? cheryl: u.s. post aves announcing plans to end saturday delivery service. the coalition for 20th century postal service weighs in on how this hurts business. dennis: small business owners losing confidence fast. how small business committee chairman, sam graves, on what needs to be done next. cheryl: and, our money under attack. lou dobbs joins melissa and lori next as the federal reserve admits it has been hacked. it's a new day.

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